Is This The Right Time For Property Investment In India?
The Indian real estate sector has come full circle from being the sunshine sector to witnessing the lowest lows with sluggish sales and even the near formation of a property bubble in some cities. The average investor looking either to purchase a property for personal use or to invest in the sector for future gains is always in a double mind. Entering the real estate sector at the right time is not only important in terms of balancing the overall cost of the property, but also essential since any wrong timing can jeopardize the entire investment. With the new government firmly in place and post-budget jitters gone, let us look at various aspects of investing in the real estate sector this festive season for both Indian as well as NRI investor.
Festive offers and home loan discounts: During the festive season, the real estate market was buzzing with activity as banks and NBFC’s were offering handsome discounts on home loans. The rate cut on home loan due to the festive season bonanza offered a great opportunity for buyers to buy their dream property at lower rate of interest and save some money in the process. Interest rates for women borrowers were discounted for a while with both SBI and ICICI, two of the major public and private banks, offering lucrative discounts for women borrowers. Due to such discounts, opting for a home loan this time is worth its weight in gold for the average customer.
No hike in EMIs due to unchanged repo rates: The Reserve bank of India has left the repo rates unchanged in the last four of its policy review meetings leading to a stable EMI on home loans. As the RBI governor has suggested that the next rate cut could take a while until the inflation is below the government target, any immediate repo rate cut leading to lowering of home loan EMIs is not possible. Hence the current rate offers the lowest EMI option along with a discounted rate of interest due to festive season discounts.
Home loans may get cheaper soon: As the retail inflation has been dropping substantially, the policy rate cut by the Reserve Bank of India (RBI) much before the January 2016 deadline is a strong possibility. This would mean lowering of home loan EMI rates much before this deadline. Although the home loans are unlikely to offer any cheaper rates than the current levels, waiting till 2016 would not be a good idea.
Satellite Cities – the next golden investment hub: Rapid urbanization in the smaller cities in line with the development of 100 new cities and smart cities as suggested by the finance minister in the annual budget offers a great investment opportunity. A large number of domestic as well as NRI investors are looking at options in satellite towns both for personal use as well as for better investment options. If investing in metropolitan cities was the success formula a decade ago, satellite towns and tier 2 and tier 3 cities are leading the investment opportunity in 2014.
